HOW TO SURVIVE HARD TIMES SERIES
Homeless Prevention
Homeless Prevention
1
Facing Homelessness
M
any individuals and families lose their homes due to job loss or mortgages that ballooned into payments that were beyond their reach. As a result many formally stable, middle class families are facing homelessness. Fortunately, there are programs available to help families that are homeless or in danger of becoming homeless get back on their feet. Most people think that housing assistance programs are only designed for specific populations such as veterans, long-term homeless persons with disabilities, serious mental illness, diseases or drug and
2
Homeless Prevention
substance abuse issues. However, you do not have to belong to any of those subpopulations to receive housing assistance through various HUD sponsored programs. The definition of who can be considered homeless is found in section 103 of the HUD McKinney-Vento Act and states “someone who is living on the street or in an emergency shelter, or who would be living on the street or in an emergency shelter without supportive housing assistance.� If you fit the definition, here are a few housing programs to consider:
Transitional Housing: This program’s focus is to help transition individuals or families from homelessness to permanent housing in a short period of time by providing free temporary housing for women, men and families. The stay in a transitional housing program can last
Homeless Prevention
anywhere from 3 to 24 months. They are designed to provide an opportunity to find work and get back on your feet while providing you with supportive services such as childcare and job training that can help you live in permanent housing again.
SECTION 8 Housing Choice Voucher Program: Managed by local Public Housing Authorities, Section 8 is a program that provides affordable housing opportunities to low-income families and other special populations by providing housing vouchers. Section 8 has gotten a bad rap over the years mostly due to abuse of the program; however, many families use Section 8 responsibility as they work to improve their quality of life.
3
There are basic eligibility requirements for Section 8. The primary one is income. In most cases, the family’s income may not exceed 50% of the median income for the county or metropolitan area in which the family chooses to live. The family is responsible for finding their own suitable housing and a landlord who will accept Section 8 vouchers. A housing subsidy is then paid directly to the landlord on behalf of the family. The family must pay the balance of the rent not covered by the voucher which is usually 30%.
Section 8 Home Ownership Program: Participating Public Housing Authorities can allow eligible individuals and families to convert current Section 8 vouchers from rental subsidies to mortgage subsidies and purchase a modest home. This is available to first time home buyers, but don’t think you are out of the running because you have owned a home in past. HUD’s definition of a first time home buyer is someone who has not owned or had an ownership interest in a residence for the last three years. You still have to meet income and employment requirements and at least one percent of the purchase price must come from personal resources. Other requirements include homeownership counseling and periodic housing inspections for as long as you are receiving assistance. 4
Whether you consider the Section 8 Housing Choice Voucher or the Home Ownership Program, the waiting list can take months or years depending on where you live. Contact the local Public Housing Authority in your area for more information.
There are basic eligibility requirements for Section 8. The primary one is income. In most cases, the family’s income may not exceed 50% of the median income for the county or metropolitan area in which the family chooses to live.
Homeless Prevention
AVOIDING FORECLOSURE
W
hen going through hard times, the most crushing blow can be losing your home. Many people think the only option available to save their home is a loan modification. Of course, getting your mortgage reduced to a more affordable payment is idea—if you qualify. Unfortunately, the change in your finances that caused you to need a mortgage modification can be the very thing that prevents you from getting one. Here are some other programs designed to help you avoid foreclosure.
Special forbearance: Your lender may be able to arrange a repayment plan based on your financial situation. Your lender may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you can prove you recently lost your job, your source of income or if you had an unexpected increase in living expenses. Homeless Prevention
5
Partial claim: Your lender may be able to work with you to obtain an interest-free loan from the U.S. Department of Housing and Urban Development (“HUD”) to bring your mortgage current. You may qualify if: 1) your loan is at least 4 months delinquent but no more than 12 months delinquent; 2) your mortgage is not in foreclosure; and 3) you are able to begin making full mortgage payments. When your lender files a partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must execute a promissory note, and a lien will be placed on your property until the promissory note is paid in full. The promissory note is interestfree and will be due if you sell or leave your property or when your mortgage matures.
Pre-foreclosure sale or Short Sale: This will allow you to sell your property and pay off your
mortgage loan to avoid foreclosure. You may qualify if: 1) the “as is” appraised value is at least 70% of the amount you owe and the sale price is 95% of the appraised value; 2) the loan is at least 2 months delinquent prior to the pre-foreclosure sale closing date; and 3) you are able to sell your house within 3 to 5 months (depending on what your lender agrees to).
Deed-in-lieu of foreclosure: As a last resort, you may be able to voluntarily “give back” your property to the lender. You can qualify if: 1) you are in default and don’t qualify for any of the other options; 2) your attempts at selling the house before foreclosure were unsuccessful; and 3) you don’t have another FHA mortgage in default. The last two options won’t save your house, but could possibly save your credit rating and help your chances of getting another mortgage loan in the future.
RENT MORTGAGE ASSISTANCE E
mergency Shelter Grants (ESG) and Emergency Food and Shelter Assistance (EFSA) are two federally funded programs that offer short-term homeless prevention services to aid people who are at imminent risk of becoming homeless due to eviction or foreclosure. Various public and private agencies
6
Homeless Prevention
are granted funds to assist those who qualify with emergency rent and mortgage payments, foreclosure assistance, overdue utilities and even security deposits on a new place. Your local Continuum of Care or County Department of Community Development usually has information on which agencies provide these services in your area. Local townships usually have general assistance programs designed to provide help for residents who are facing financial difficulties. This includes rent, utilities, clothing and other services. Eligibility requirements vary by township but help is available.
Other Ways to Keep Your Home T he price difference between having a two or three bedroom apartment could result in a savings of $300 per month or more. So, if you are struggling to pay the rent, consider making the switch. That is, if you live in a three bedroom apartment, switch to a two bedroom when your lease is up or move from a two bedroom to a one bedroom. You get the point. Just move on down to give yourself some relief and keep a roof over your head! If your financial situation is too grave to wait for your lease to end, talk to your landlord about your circumstances. You may be charged a small fee for breaking your lease, but allowed to make the switch. You can always move back-up when your finances improve. Another idea is to consider renting Homeless Prevention
out a basement or spare room in your home. This is a great alternative if you are having trouble paying the bills on your own. Average out your monthly expenses and charge your boarder a lump sum equal to 60% or 70% of the total and profit a little. This approach is better than trying to go fifty-fifty on everything. After all, it is your place. When on the lookout for a boarder, try to find a reliable family member or friend. I know friends and relatives can sometimes be the worst roommates. Still, in today’s world, it’s sometimes safer to personally know the person you are living with. In cases of divorce or death of a spouse, when you relied on a spouse to pay the mortgage, you may consider selling your home and moving into a less expensive one while you still have equity in the home. 7
Read The Entire
How to Survive Hard Times Series • Managing Bills During Hard Times • Seek Assistance • Attitude Adjustment • Budgeting When You’re Broke • Avoiding Scams • Vehicle Repossession • Creating Your Own Employment Opportunities • Homeless Prevention • Finding Money • Beware of the Company You Keep! • The Student Loan Blues • Steering Clear of College Debt
©2013 Amhar Publications. All rights reserved. Printed in USA Amhar Publications, Inc. 20650 S. Cicero Avenue, Matteson, IL 60443 To reorder visit
www.amharpub.com